The earthquake came unexpected even though it was predicted since a long time to happen on the Gold Coast of Costa Rica in Guanacaste. The epic center was as expected in the area of Samara, about 90 km south of Tamarindo. It started of little and reached 7.6 on the Richter scale. It took about 30 seconds and was an incredible and frightening experience. The good news is that there was no major damage, mostly some roof tiles falling off, broken glass in some commercial centers with big windows. Also things like bottles and TV’s etc fallen of the shelves or broken water pipes at a few properties. All this is fairly easy to fix. The best was that as far as we heard till now, there is no dead or heavily injured person. It feels pretty good that nobody got hurt considering the impact it had. We drove through Tamarindo and the surrounding area today and had been impressed how the buildings and structures had no visible damaged. The engineers did a good job and it shows that Costa Rica has great building codes because of such earthquakes. Here is a small video
Law No. 10, which regulated the sale of liquor for over 75 years, has now been replaced by a new law as of August 8, 2012. The Municipalities have three months to enforce it, so the changes should apply by early November, 2012. The new law, called “Ley para la Regulación y Comercialización de Bebidas con Contenido Alcohólico,” seeks to: eliminate speculation, create equilibrium between economic development and control of the activity of selling liquor, strengthen municipalities’ financial independence, and eliminate an existing black market for such licenses.
The new law eliminates the possibility for holders of licenses granted prior to its enforcement to sell, rent, or transfer the licenses. This ends a very lucrative business limited to a few holders of these permits.
Now, in order to get a permit to sell alcoholic beverages, the interested party has to solicit it at the local municipality, complying with certain requirements that respect the “Plan Regulador,” the specific “Uso de Suelo” for the place where the permit will be exploited, avoid social risk, and other requirements.
Additionally, the distance between the business that sells liquor and such places as schools, universities, churches, hospitals, and clinics is now established at a minimum of 400 meters; locations within commercial centers being an exception. Permits will not be granted in neighborhoods clearly established as residential. Type B licenses that include bars, discotheques, clubs, and cabarets will be granted in districts at the highest density of one per every 300 citizens. The lowest cost for these concessions will be 180,000.00 colones per quarter (around USD$120 per month).
Investing in property overseas can be a great way to boost your investment portfolio, and one of the hottest places to invest in property right now is Costa Rica. A beautiful land with the Pacific on one side and the Caribbean on the other, Costa Rica is an amazingly peaceful country with everything an investor could dream of, including coastal and mountain based properties, forest areas, prosperous urban developments, and farms. However, there are several things you need to know before you begin the process of buying real estate there.
One of the first items you should be aware of is the lack of finance opportunities available to foreign investors. Unlike in many other countries, Costa Rican banks only lend money to citizens. As a result, investors must look for other options. Perhaps the best, and most common, way for offshore investors to finance their purchase is through an owner-financing plan. While some banks are starting to allow other kinds of loans, interest rates are high (between 25 and 29 percent), and finding some other option is probably the best way to go.
Another thing you need to be aware of before you invest in Costa Rican property is the legality of the situation. The Costa Rican constitution guarantees that overseas investors have a right to own real estate, and some title companies will back up your property with additional guarantees, but finding an attorney who works with overseas property investors is the best way to handle the legalities of property ownership, as in Costa Rica, an attorney must not only complete the transfer of the deed itself, he or she also has to handle the title search. In Costa Rica, most properties are listed in the “Folio Real,” a computer system at the National Registry. Before you even consider making a property purchase, complete a title search as you can to do it yourself through the National Registry’s system. Such a search can offer important information including the boundaries of the property and any current liens against it. If you are considering the purchase of land in Costa Rica, be sure to ask whether the ownership or occupation rights are for sale. Ownership rights are comparable to those in other countries, but occupation rights can get a bit tricky, and an attorney is essential to sort out the processes that go with them.
One final step you should take before you invest in Costa Rican property is to enlist an agent while you are searching for the perfect property. There are several reasons you might want to use an agent. Agents can help to protect your interests and refer you to the right people, including lawyers. Moreover, they can help to get you the best deal and let you know what the regulations are regarding particular kinds of properties. Be sure to choose one who specializes in investors, and make sure you get an agent who is licensed, as licensing is not a requirement to be an agent in Costa Rica.
Investing in Costa Rican property can truly be an important financial asset to your portfolio, but knowing your way around before you decide to make a purchase is essential.
Way back when I first moved here I was asked by friends and family, “Why Tamarindo?” Back then, there were just a handful of families here; basically, a combination of fishermen and business owners. Everybody knew everyone in town, and there were very few amenities, if any. One administrated telephone for the whole town, long electrical blackouts in the rainy season, three TV channels with horrible reception, and a forty minute drive to do your marketing and banking. So, with all that I was asked, “Why Tamarindo?” Well, I would say, it is one of the most beautiful beaches in the country, there’s great surfing, excellent fishing, the consistent weather, and good hard working people as neighbors.
Now, 30 years later, with the boom of the early 2000s behind us and a world economic crisis that is trying to linger on, that question is more relevant than ever. A shy recovery was noticed in early 2011, activity has improved, property sales have been pretty consistent since, but it hasn’t taken off. The market has been more like “bouncing off the bottom;” but, as the needy seller sells and the prime properties are sold (or taken off the market) the more recent commonly used phrase, “We’re cautiously optimistic,” may change soon to, “Buy now before what you want is sold.” There is also other evidence of recovery in Tamarindo besides property sales, like new businesses opening, older ones remodeled or rebuilt, new homes under construction and developers beginning new projects. All are positive indicators that we are beginning a more steady recovery.
So, when the question is asked today, “Why Tamarindo?” the answer is a bit more extensive. It is one of the most beautiful beaches in the country, great surfing, excellent fishing, the consistent weather, good hard working people as neighbors, and we now have the new Liberia International Airport and a soon-to-be-finished first class hospital (CIMA) both within an hour drive, high-speed Internet, cable TV, doctors, dentists, markets, stores, pharmacies, hardware stores, mechanics, veterinarians, schools, banks, car rentals, a small plane airstrip and, of course, excellent restaurants.
This is still a buyers’ market, but the question now is how long will there be enough property inventory available for that to remain a fact?
President Laura Chinchilla launched a new green campaign for the country Monday to remind the people of Costa Rica about their carbon footprint.
The campaign, Limpia tu huella or “Erase your print,” aims for environment responsibility. The project is to inform individuals about actions they can take to reduce their carbon footprint.
The president along with Renee Castro, the minister of Ambiente, Energía y Telecomunicaciones can already count on the participation of certain corporations, private and public institutions that have signed the environmental agreement. Some of the names to participate in the campaign are Instituto Mixto de Ayuda Social and the company S.C. Johnson de Centroamerica S.A., the Pavas-based insecticide distributor. Some of the actions taken by the institutions and corporations are to save energy, use renewable energy, and to carpool.
The president has taken a role to promote Costa Rica as a green country. She has blamed First World industrialization for global warming and hurricanes. This new campaign was created by her administration.
This is program is part of the Costa Rican government goal to become carbon neutral by 2021.
This tax applies to every titled property. Its collection is administered by the local municipality. It represents 0.25% per year of fiscal value recorded in the National Registry. Fiscal values are assigned following the procedures established in the legislation. They can be referenced to the highest sales prices reported, an appraisal performed by the Municipality’s engineer, the value of a mortgage (if applicable) over the property, or a declaration by the contributor.
The taxes are collected per quarter (by the end of March, June, September, and December), but the contributor may pay the whole year within the first quarter. If several periods are pending, interests will be charged and the case could be sent to a judicial process which would end in the payment of legal fees upon payment or the eventual foreclosure of the property due to this debt. When selling your property, the taxes have to be paid up-to-date; if not, it might delay the closing. Make sure you are up-to-date and keep the receipts. It is best to get a so-called “Constancia” Municipal, a statement that you don’t owe anything to the Municipality to supply to the buyer. A “Constancia” is free, just ask for it.
Where to ask: Tamarindo and the surrounding areas are administered by the Municipality of Santa Cruz. Its offices are located in the city of Santa Cruz, phone number (506) 2680-0101: ext. 202 Patentes & Taxes; ext. 203 Collections; ext. 204 Bienes Inmuebles (Real Estate).
Luxury Home Tax
Ley 8683 Impuesto solidario para el fortalecimiento de programas de vivienda
Law number 8683, in firm on December 10th, 2008, created a tax with the specific purpose of financing welfare housing programs with funds gathered from owners of luxurious homes. The law itself states that the tax will be valid starting January 2009 and for ten years (until January 2019).
A contributor to this tax is any entity that owns a house classified as luxurious by January 1st of the year. The tax must be paid by January 15th or the following working day of the natural year it applies.
To analyze if a property is subject or not, and to calculate the amount of the tax to be paid annually, an appraisal is to be performed following a manual (“Manual de Valores por Tipología Constructiva”) created and updated by a dependency of the Tax Authority (Órgano de Normalización Técnica). The initial threshold value of construction from which a property started to be considered as luxurious in 2009 was 100 million colones. This threshold is updated each December and right now it is at 111 million colones (around USD$220,000.00).
If the construction of a home exceeds the threshold, the value of the land is included according to survey maps created for each municipality. Homes within condominiums must include their participation over common areas as part of their assessed value.
The rate of the tax is established on a tier system. It goes from 0.25% to 0.55% depending on the appraised value.
The assessed value for properties standing in 2009, when the tax started to apply, is good for 2009, 2010, 2011, and 2012. Hence, within the first 15 days of January 2013, properties should be reassessed applying the threshold, tiers, and calculation manual valid at that time, and a new value must be declared. According to these variables and the application of the depreciating factor, properties that were previously exempt from the tax may apply, and others may become exempt. For properties declared after 2009, the declaration is valid for three periods, after this, the property should be reassessed and the new value declared.
A house that is built within the years the tax is valid and applies as a luxury home must declare and file the tax the first January 1st it is finished.
Inscriptions, filings, and payments are performed through digital and physical forms available by the tax authority (Dirección General de Tributación (dgt.hacienda.go.cr)) and payments are collected by most banks.
New Tax on Corporations
Ley No. 9024 Impuesto a las Personas Jurídicas
According to the new law number 9024 “Impuesto a las Personas Jurídicas,” published in the official newspaper “La Gaceta” on December 27, 2011, this new tax is now being collected. The tax was set at 50% of the base salary established in the year for entities considered “active” or having economic activity and at 25% of the base salary established in the year for entities considered “non active.” Normally, this tax will be collected in the month of January, but as the law started to apply in April, 2012, this year the proportionate share must be paid by April 30th, 2012. In dollars, the corresponding tax is USD$271.00 for an active legal entity and USD$135.50 for a non-active legal entity. The official collecting agent for this tax is Banco de Costa Rica (www.bancobcr.com) through all their branches.
Let’s use as an example Casa Europa, one of our listings which recently sold with a listed sales price of USD$299,000. The property is held through a corporation.
When performing an appraisal based on the construction value, excluding the land, landscaping, and furniture, it will come out to be lower than USD$220,000.00, hence the house will not be subject to paying the luxury home tax. This property would pay USD$747.50 in property taxes per year and it would pay USD$406.50 in tax on corporations.
Another example of a higher priced house would be our listing Casa Camille, with a price of USD$1,090,000.00. The property is held through a corporation.
Based on the fiscal value it has registered, it currently pays USD$154.00 per year in property taxes. When performing an appraisal based on the construction value, it applies for the luxury home tax, then the value of the land is included and the amount of luxury home tax paid per year is $1,077.00. This property would pay USD$747.50 in property taxes per year and it would pay USD$406.50 in tax on corporations.
This article was written by our agent Federico Jose Fernandez, who is also an expert in tax consulting. Feel free to contact him at A&A Consultores, and he will be happy to help you. Email: email@example.com or call (506) 2653-6787.
It is a fact that owners of condos and apartments in such places as Tamarindo tend to rent their properties for vacationers more and more. According to Costa Rican newspaper La República, in an article about the subject published on Monday, March 12, 2012, 25% of tourists that left the country through the international airports in San José and Liberia in the last five years, stayed not in a hotel, but in a house or condo. The offer of vacation rentals in private individual properties has increased in the past five years. This is reasonable as the building of such properties flourished between 2006 and 2008 and, now that tourism is picking up, owners find in its rentals a way to get a current return from these assets. For vacationers, this is attractive as well because they get to choose from a variety of options, some of them roomy and luxurious houses, at prices that are usually lower than what hotels offer.
The possibility to get rental income out of the property is an additional incentive for buyers willing to get a place for their personal enjoyment for a couple of weeks a year but wish to share the experience with renters.
To illustrate this with an example: a condo priced at USD$450,000.00 could be rented at an average of USD$1,500.00 a week. In the most expensive weeks (Holy Week and New Year’s Eve), this price could double. A property manager can arrange the maintenance at a fixed monthly fee of around USD$100 and rentals by receiving a commission that usually is 20%. Right now, an average occupancy rate of such a property could be 30% – 55%. This occupancy rate might be higher with good promotion and marketing tools via the Internet or other strategies. Such a condo has the following costs: an HOA fee (Home Owners Association fee) of around USD$300, and yearly property taxes of around USD$1,000.00.
Based on these figures, if such a condo was rented 55% of the time, including Holy Week and New Year’s Eve, it could generate around USD$45,9000 worth of gross rental income. If you subtract the rental commissions and assign a secure number figure of 20% from this income to the maintenance, the funds received would be USD$27,540. After taxes, a property in these conditions could be making a yearly profit of around USD$20,000.00. This represents around 4.5% return per year. This does not take into consideration the appreciation of the real estate.
It is up to each owner what portion of time it is allotted to rent the place, to enjoy it personally or by family and friends, or to just leave it unoccupied. It is definitely true that these investments are self-sustainable in terms of their maintenance and, of course, owning and enjoying a home in paradise is priceless.
As published in the country’s Official Newspaper “La Gaceta” on the 27th of December 2011, a new law has been approved, which will come in to force on the 1st of April 2012, to levy an annual duty on all Public Limited “Sociedades Anonimas” (S.A.) and Limited Companies “Sociedades Limitadas” (S.R.L.). In short, the law implicates a levy or tax on all companies set up in Costa Rica and registered to date in the Companies Registry Office as well as all future new companies.
The amount of tax will be equivalent to either 50% of the monthly base salary ($350) for active tax-paying companies or 25% of the monthly base salary ($175) for dormant or inactive companies.
If your company is currently registered as active and tax-paying, but has NOT had any financial activity which would require tax declaration; we would recommend that you de-register said company in order to pay the lesser duty: that is, only 25% of the monthly base salary.
The new annual tax is compulsory and its payment will be required of all active and inactive companies; in the event that you have invested in Costa Rica through these types of companies, you should consider that starting from April this year you will need to pay the aforementioned new annual duty.
The legal representatives or proxies are accountable and fully responsible for the payment of the new duty and with respect to non-payment the law stipulates sanctions and fines which could put your property at risk.
Should you decide not to pay the tax, interest and overdue charges at 1% per month from the date of non-payment will be added to the original duty. With regard to overdue companies, the Registry Office will not issue official company paperwork or “personería” certificates nor will they be able to register any new legal documents or bid for any State or Public contracts.
The law also states that non-payment of the tax for 3 consecutive periods will cause the overdue company to be dissolved.
Starting from the 1st of April there will be a 3 month period in which companies can be dissolved and by this manner, avoid payment of the new tax, as well as a 24 month period in which the companies’ legal representatives or proxies can resign from their positions and avoid any eventual responsibility. There will also be a 6 month window in which property can be transferred without having to pay the usual transfer duties.
The star of the popular show “Dog Whisperer with Cesar Millan” will work his magic at a Jan. 28 show at the National Stadium in San José.
Who said you can’t teach an old dog new tricks? Cesar Millan, the world-renowned dog behavior specialist and co-creator and star of the popular television show “Dog Whisperer with Cesar Millan,” will share dog training tips and advice during his Jan. 28 show at the National Stadium in San José. RPMTV Xtreme Family Entertainment is sponsoring the event.
In addition to his hit series, broadcast on Nat Geo Wild in the U.S. and on Animal Planet in Latin America, the self-taught Mexican-American Millan has written several books on dog training and has toured around the world. Millan has something of a cult following among dog owners and has used his behavior techniques to help the dogs of celebrities Oprah Winfrey and Will Smith.
According to RPMTV Media Manager Juan Carlos Peña, Millan will talk about how to have a good, balanced, healthy pet at the Jan. 28 show. This includes mental health; Millan considers this one of the fundamental principles of owning a pet. Using his own dogs, Millan will demonstrate what constitutes good habits and correct conduct. To show how to modify dog behavior, Millan will use dogs from Costa Rica with behavior issues, and offer solutions.
Tickets will be available online at www.laboleteria.co.crstarting Dec. 1, and will cost ₡8,000-₡35,000 ($16-$70). For more information on Millan, visit his official website at www.cesarsway.com.
Here is some general info about how to obtain residency in Costa Rica. The information was provided by Lic. Marcela Guardian who is helping foreigners with the residency in Costa Rica.
Residency as an Investor
The foreigner can apply for this type of residency if he/she has and demonstrate investments in Costa Rica for USD$ 200.000 . The investment should be in specific areas as tourism, reforestation, shares in a CR corporation, properties and/or any other activity supported by the Costa Rican government.
Residency as a Renter
The foreigner and its family can apply for this type of residency if he/she receives US2.500 -minimum amount- as a monthly rent or has bank investments in CR for $150.000 and will not work while living in Costa Rica *( The foreigner can work in CR only if he has its own costarican corporation/business) To prove the income, the foreigner must get a letter from a Costa Rican Bank or financial institution , foreign bank, CPA or Law Firm certifying he/she will be receiving a monthly rent of $2.500 for the next five years. If letter is issued outside CR must be authenticated by correspondant CR Consulate.
Residency as a Retired Person
The foreign can only apply for this type of residency if he/she is entitled to a lifetime pension of $1000 per month in their country of origin and will not work while living in Costa Rica. * (The foreigner can work in CR only if he has its own costarican corporation/business ) The applicant must obtain a letter to prove lifetime pension and letter must be authenticated by CR Consulate
1. Application Letter: This letter should include the following information
complete name of the person applying for the residency
nationality, marital status and occupation
passport number, date and place where it was issued and date it expires
name of any direct family member (children or wife) dependent on the income of the applicant who will also apply for residency
date in which the applicant enter Costa Rica
a formal request of his/her desire of being a Costa Rican resident
specify the type of residency
temporary address in Costa Rica or the address in the country of origin
Must indicate a place or fax number to receive notifications
2. Birth Certificate: Needs to be authneticates by the Costa Rican Consulate located in the country where the document is issued, and further legalization by Ministry of Foreign Affairs in Costa Rica. This document expires after 6 months of being issued.
3. Marriage Certificate: Needs to be authenticated by the Costa Rican Consulate located in the country where the document is issued, and further legalization by Ministry of Foreign Affairs in Costa Rica. Expires after 6 months of being issued.
4. Police record: Needs to be authenticated by the Costa Rican Consulate located in the country where the document is issued, and further legalization by Ministry of Foreign Affairs in Costa Rica. Expires after 6 months of being issued.
5. Finger Prints: They need to be taken at the Ministry of Security in San Jose, Costa Rica and applicants must bring passport and 3 photographs
6. Certified copy of the entire passport (even blank pages).
7. Special Power of Attorney granted by the applicants to the attorney that will handle the residency application.
8. 8 passport size photographs
9. The applicant is required to pay $250 at the following bank account that belongs to Immigration: Banco de Costa Rica, cuenta 242480-0
10. Consular registration at the embassy of its origin country located in Costa Rica.
NOTE: All documents written in a foreign language must be translated into Spanish.
EXPENSES AND LEGAL FEES:
Legal fees on each residence application are: $1.700 per adult and $500 per minors ( 70% of legal fees are required to start the process.)
Authentication Fee: $42 per document.- (Documents that will require legalization: birth certificate, police record, marriage certificate and the letter certifying the pension or monthly income)
Immigration Deposit: $250 per application
Translation fee: USD$20,00 per document ( max. 2 pages )
We from ABC Real Estate hope this was helpful and will be glad to connect you with Lic. Marcela Guardian